- The fund will help cotton farming communities accelerate field-level sustainability work in the face of climate change, starting with India.
- Vetted Farmer Producer Organisations[1] (FPOs) across the country will be eligible to gain funding to expand their services and simultaneously build a positive credit history.
- Smallholders represent more than 90% of the world’s cotton farmers.
18 July, Geneva – Better Cotton, the world’s largest cotton sustainability initiative, and impact investment firm, FS Impact Finance, have signed a Memorandum of Understanding (MoU) to jointly develop and launch a fund directed at smallholder farmers in the cotton sector. The fund, initially piloted in India, will help incentivise cotton farming communities to invest in field-level work related to women’s empowerment and climate resilience [2] by eliminating traditional financing barriers. Smallholders, who make up more than 90% of the world’s cotton farmers, often struggle to access adequate financial support due to their Farmer Producer Organisation’s (FPO[3]) lack of credit history.
Only a small number of sizable, well-established FPOs in India, where there are 16,000 FPOs representing over 5.8 million farmers, have access to official financial markets. But most don’t have enough turnover or credit history to be eligible for financing, which is necessary for expansion.
The objective of this new fund is to improve the bankability of FPOs and expedite field-level achievements by supporting them in implementing gender and climate resilience programs. As a result, less developed FPOs will be able to enhance their credit history and obtain services that will assist them in formulating long-term, strategic growth plans.
“This collaboration with FS Impact Finance has the potential to accelerate important work already underway in India, and it will do so in an inclusive way,” said Alan McClay, CEO of Better Cotton.Smallholders often face difficulties obtaining financing, therefore we are thrilled about the possibility of working to address that.
“We look forward to jointly developing this innovative financing solution in the cotton sector that complements Better Cotton’s great work in this area,” said Martin Cremer, Managing Director of FS Impact Finance. Our objective is to help smallholder farmers and to support the growth and professionalization of those involved in local value chains.
